Analysts praised SDCL Energy Efficiency Income (SEIT ) for outlining the portfolio’s growth opportunities in full-year results this morning, making good on a promise to provide greater transparency at a capital markets day earlier in the year.

The final results covering the year to the end of March, in which net asset value (NAV) fell, saw SDCL provide details of the cost of revenue model for each major investment, as well as relevant key performance indicators and value accretion potential across its portfolio of renewable infrastructure assets in the US, UK and Europe.

For example, it highlighted two drivers of value for US-based solar energy generator Onyx, such as increasing its pipeline of assets and improving the economics of new individual solar projects. Over the period, Onyx’s valuation increased by £14m as the expectation rose that more solar assets would come online.

‘In effect, this delivers on the promise made at the recent capital markets day of outlining the growth opportunities within the portfolio, and so should help the market see the fund as less of a bond proxy and more of a growth story,’ said Jefferies analyst Matthew Hose, giving a ‘buy’ recommendation. ‘That said, SEIT will now have to demonstrate it can execute on these growth opportunities.’

In total, value-accretive projects could add 8-16% to NAV over the next few years, Stifel analyst Sachin Saggar said. ‘If a manager is willing to show in detail their key deliverables for the next few years, they must have some level of confidence in their ability to execute as investors can pick these apart in due course,’ he explained.

While the initial capital markets day was designed to address the £820m trust’s yawning discount to NAV, analysts responded well to this morning’s news, as did the market, driving the shares up 1.5% to 75.4p, a 26% discount.

The 8.1%-yielder launched a £20m share buyback programme in April and has spent £14m to date, with the discount still wider than the sector average of 24%. Another discount control measure includes a continuation vote, which the trust faces at the annual general meeting in September this year and then every third year going forward.

As risk-free government bond yields climb in line with interest rates, renewable trusts have heavily derated, with SDCL shares down 33.7% over the last 12 months, according to Numis.

The £820m trust’s net asset value total return fell 0.8% over the period, which was largely driven by a 70 basis-point increase to its discount rates, reflecting the risk of future cashflow in line with rising interest rates. This translated to an overall pre-tax loss of £18.6m versus a £79.8m gain in 2022.

Oliva Spanish Cogeneration, a portfolio of onsite waste recycling, onsite generation and process efficiency supporting the olive oil industry in Spain, saw its valuation fall £10m as a delay in regulatory updates reduced utilisation.

Swedish Gas distribution network Vartan Gas was negatively affected by £17m owing to a revised funding model, which is currently being appealed and could be reversed, and a further £9m owing to a lower growth assumption in biogas use.

Overall, the portfolio delivered a return of 5% for the year.

Other valuation gains include district energy system Red-Rochester, which constitutes 22% of gross asset value (GAV), rising £18m, driven by a revised electricity pricing methodology.

Saggar was positive, noting that there should be limited downside given that US interest rates should be the first to stabilise, removing a major headwind for 59% of the portfolio’s GAV.

The portfolio earnings remained stable with half the portfolio partially or wholly linked to inflation. Revenues of £85m covered the 6p per share dividend 1.2 times. Chairman Tony Roper said the trust was targeting a 6.24p dividend for the year to March 2024, a 4% increase.

SEIT has relatively low leverage at 32% of GAV, putting it in good shape for a high interest rate environment. Commitments are also low at £50m, providing breathing room to execute on its key projects.

The trust, which is managed by Jonathan Maxwell and launched in 2018, invested £240m in new and organic investments and existing commitments during the year and a further £30m since the year-end.

The fall in NAV means the ongoing charges ratio rose to 1.02% versus last year’s 1%.